Judge makes ruling on Whitefish doughnut dispute

A Flathead District Court Judge has ruled no standing agreement exists between the city and county for control of the two-mile planning doughnut around Whitefish, effectively giving control of the area to the county.

In a decision released Monday, Judge David Ortley ruled that the 2010 interlocal agreement between the City of Whitefish and Flathead County was legally terminated by the county. Until the county adopts a growth policy and zoning for the doughnut, however, the city will have authority to enforce its regulations for that area.

On the voter-approved referendum that sought to repeal the 2010 agreement, Ortley ruled that the referendum was illegal and therefore could not do away with the agreement.

Attorneys representing parties in the lawsuit concerning control of the planning doughnut gave oral arguments in Flathead District Court in February and have since been awaiting a decision.

The lawsuit, by four residents, against the city sought to void the referendum passed in November 2011. The referendum was intended to repeal a 2010 planning agreement between the city and county regarding the doughnut area.

The crux of the lawsuit was whether the referendum was illegal. The city claimed that the referendum was valid. The county said the referendum was an illegal repeal and it should resume control of the doughnut.

Kalispell attorney Duncan Scott, who represents the four residents, said Ortley's ruling "is a welcome victory for the 5,000 doughnut property owners, who have suffered for more than five years under Whitefish's 'regulation without representation' form of government."

He said he hopes the Whitefish City Council would not appeal the decision.

"Whitefish cannot win this fight," he said. "If the Montana Supreme Court reverses Judge Ortley, which we think is highly unlikely, and somehow the old 2005 Interlocal Agreement springs back to life, then the County itself can put a referendum on the ballot to repeal the 2005 Interlocal Agreement. In a county-wide election, where doughnut residents can actually vote, does anyone seriously think Whitefish would prevail?"

The Whitefish City Council will have to decide whether to appeal the ruling to the state Supreme Court. It's a decision the council could make as early as Monday.

Ortley found the 2010 agreement to be an administrative action because it “was a means simply to resolve disputes” between the city and county, and it did not create a new law. Therefore, as an administrative action the 2010 interlocal agreement was not subject to repeal by referendum.

Under state law, a legislative action (creating a new law) is subject to repeal by referendum, but administrative action (executing an already existing law) is not.

As a result of the fact that the referendum was illegal, the 2010 interlocal agreement was considered to be valid and enforceable. When the county gave notice in June 2011 that it intended to withdraw from the agreement it was within its rights to do so.

Ortley noted that either party, the city or county, was allowed to withdraw from the 2010 agreement at anytime by giving one-year notice based upon the language of the agreement.

Because the county chose to withdraw from the 2010 agreement, Ortley ruled there is now no agreement between the city and county. However, the city retains authority to enforce planning regulations in the doughnut until the county adopts a growth policy and planning regulations for the area.

The 2005 interlocal agreement initially gave planning control of the doughnut to the city, but the county rescinded that agreement in 2008 based on the fact that doughnut residents have no representation because they can't vote in city elections. The city filed suit against the county questioning the original agreement and the 2010 agreement was approved as a compromise.

As part of its arguments in the lawsuit, the city claimed that because the referendum repealed the 2010 document that the original 2005 planning agreement should be in effect.

Ortley ruled that because the 2010 agreement was found to be valid, the 2005 agreement “was not revived in any fashion.”

In the lawsuit, both the city and county ask for “damages” because both say the other breached the 2010 agreement. Ortley noted that while both parties claim entitlement to damages, “neither party has made clear just what those damages may be.”

He said such uncertainty was how both parties reached the compromise in the 2010 agreement, and once again “leaves the parties fighting over a now stale doughnut.”

Plaintiffs in the case are Lyle Phillips, Anne Dee Reno, Turner Askew and Ben Whitten. Intervenors in the case are Dan Weinberg, Ed McGrew, Mary Person and Marilyn Nelson.

All parties in the lawsuit previously submitted motions asking for summary judgment, which means they agreed on the facts, but disputed the legal effect of those facts.

The case could be appealed to the state Supreme Court.